Taxation in New Zealand

New Zealand law requires people and organizations to pay taxes, and the Government expenditure is paid off by these taxes. Taxes on imported goods are collected by the New Zealand customs. The main Government department that administers tax laws and collects tax payments is the Inland Revenue.

As normal New Zealand’s tax year runs from 1 April to 31 March. After 31 March each year, some individuals and all self-employed people and businesses have to fill in tax return, to declare all their income and tax paid. Depending on the circumstances Inland Revenue may grant approval for self-employed and businesses to adopt a different balance date.

To avoid double taxation, by being a resident in New Zealand and in another country, New Zealand has negotiated double tax agreements {DTAs} with many other countries. An IRD number will be given to any individual or businesses that are required to pay tax.

If you are a New Zealand resident, most of the income received will be subject to tax. This includes: salary and wages, businesses and self-employed income, most social security benefits, income from investment, rental income, profits from selling assets, income earned from overseas. Any New Zealand residents must pay tax in New Zealand on any income that has a source in New Zealand.

If your income is from salary, wages or social security benefit, your salary will be deducted under the pay-as-you-earn system. Incomes running from your own business doesent have tax deducted. In this situation one has to pay the provisional tax. If you receive any interest from any person or organistaion, resident withholding tax is deducted before it is credited to you. You can have your interest deducted at the correct rate or a higher rate to avoid an end-of-year tax bill. If your gross income is over $38,000, you should elect either 33% or 39%.

Apart from income tax Goods and Service tax is the main type of indirect tax which businesses charge as part of the costs of goods and services that they supply’s is charged virtually on all goods and services supplied to New Zealand, except for rental and residential property, financial services such as mortgages, loans and investments, and the sale of a business.